Question

Under ________ method, depreciation is calculated on written down value.

• A. Fixed Instalment
• B. Reducing Balance
• C. Revaluation
• D. Depletion

Answer 1

Answer: (B)

Reducing Balance

Under written down value method, depreciation is charged on the written down value of the asset every year. In this method, the amount of depreciation changes every year and get reduces as written down value decreases every year.

For example, Cost of asset is Rs.10000 depreciation 10% on W.D.V. method.

Cost of Asset; Rs.10000

Less: Depreciation for year I @10% Rs. 1000

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W.D.V of asset on year II Rs.9000

Less: Depreciation for year II @10% Rs. 900

and so on...